Posts tagged infrastructure
The World Bank Group (WBG) has announced it will set up a new office in Singapore, its first outside Washington DC. It said the new branch will employ over 70 people within three years, including director Bert Hofman, the bank’s current Chief Economist for the East Asia region.
The WBG office’s main purpose is to advance private-sector investment for infrastructure projects in East Asia’s developing regions, with ready access to Singapore’s large commercial banks and established companies. Channel NewsAsia reports it will also provide services through its Multilateral Investment Guarantee Agency (MIGA), which has experience with complex infrastructure projects and supports investments into and from Asia “by issuing risk guarantees to equity sponsors, banks, funds, and other financial institutions.”
source & article: Channel NewsAsia
Indonesia could exceed projections and grow up to 6.4% this year, says another banking report, while adding its voice to cautions that economic reforms must accelerate in order to do so. The country won’t see super growth of 8-9% without infrastructure and manufacturing industry development, continued land reform and increased government spending.
This report comes from UK-based Standard Chartered Bank (StanChart) and is the latest in a string of calls for Indonesia to improve its economic foundations to achieve its potential. Only 5% of US$145 billion in infrastructure projects earmarked for President Susilo Bambang Yudhoyono’s first term (2005-09) have been realized, and government spending was a deficit of 1.5% of GDP, less than the 1.8% or $14.5 billion. Even that is an improvement on 2010′s 0.6% despite a budget target of 2.1%, according to the Jakarta Globe.
The World Bank agreed with StanChart’s claims, keeping its growth projections at 6.5% for this year and next, and adding that “poor infrastructure was “one of the biggest obstacles to firms operating in Indonesia.” The Bank’s chief economist Justin Yifu Lin said Indonesia’s destiny was in Indonesians’ hands, and that with more government discipline it could replicate other Asian countries’ emergence from agricultural to developed economies and join the world’s top 10.
source & article: the Jakarta Globe
News of a boom in Southeast Asian infrastructure spending is creating excitement, according to this piece in Reuters. New government initiatives to attract investment and stimulate economic growth, along with added interest from Chinese investors, will see about US$20 billion worth of new construction projects due to begin across the region this year.
The article is most confident about projects in Thailand and Malaysia, which is about to start its $11.5 billion, three-line Klang Valley MRT railway network around Kuala Lumpur. It says the two countries are “believed to be in the early stages of a new infrastructure investment cycle,” with construction companies posting record orders.
Thailand wants to spend $62 billion in the next two decades to expand its electric rail network to 391km and start building a 23km new line on its metro system, both moves intended to increase traffic on its relatively under-utilized public transit system.
Singapore, with more modest construction projections, is also planning to expand its rail network to 280km from 138km by 2020.
Risks to investors are potential land acquisition issues in Malaysia, Thailand’s politics, a land reform bill in Indonesia and funding problems in the Philippines. Malaysia’s land laws were relatively clear compared to others, but projects with such ambitious land acquisition plans were susceptible to delays.
Analysts in the article were most optimistic about Malaysia’s IJM Corp Bhd and Gamuda Bhd, and Thailand’s Sino-Thai Engineering and Construction Pcl.
source & article: Reuters
Japanese equities firm Nomura has released a glowing report on Indonesia through its local subsidiary there, saying “this country cannot be ignored.” Its abundant natural resources, young and large population, and decade of reforms are all factors contributing to Indonesia’s current and future prosperity.
It was Nomura Indonesia’s first research report, and the company is interested in setting up a Jakarta brokerage to capitalize on a country which “finds itself in the tail winds of some of the world’s most dynamics economies” and also expressed confidence Indonesia would attain investment-grade sovereign debt rating by the end of this year.
There were the oft-repeated calls for more spending on infrastructure and further reforms to attract investment. The report listed 10 points or ‘development signals’ which needed to happen for Indonesia to reach 8% economic growth, which included opening the service sector to foreigners, passing a land acquisition reform bill, further eradicating corruption and developing the financial sector.
source & article: the Jakarta Globe
Indonesia will add to its energy infrastructure with three new Liquefied Natural Gas (LNG) terminals due to come onilne in 2012. The terminals, in Jakarta, Belawan (North Sumatra province) and Arun (Aceh province) should help reduce Indonesia’s domestic supply problems.
According to this report, the director general of the Energy and Mineral Resources Ministry, Evita Legowo, said her government also has another terminal planned for Central Java due to begin operations in 2013.
Jakarta’s terminal, which broke ground this week, is a floating terminal which eventually will be able to handle 3 million tons (400 million cubic feet) of LNG per day after starting with 1.5 million tons. It will source 1.175 million tons from the refinery in Bontang, East Kalimantan province for ten years, and is also looking for other sources.
Arun already exists as a supply terminal and will be converted into a storage facility, and will also source LNG from Bontang or Tanggun in Papua province. It will supply energy to local industries such as fertilizer, paper, and power plants. Belawan terminal’s gas will go to PLN, a state-owned power company.
The new terminals are being constructed by PT Nusantara Regas, a joint venture between PT Pertamina and state-owned gas company PT PGN (60%-40% shares respectively). Pertamina will construct the Arun terminal and PGN will look after Belawan.
source & article: DownstreamToday
A consortium of Japanese and Indonesian companies will spend US$3.2 billion on coal fired electricity plants in Central Java, after winning a contract with Indonesian state utility provider Perusahaan Listrik Negara (PLN).
The group consists of Indonesian coal miner Adaro Energy, Japanese trading house Itochu Corp and electricity company Electric Power Development Co (J-Power). News of the development comes as the Indonesian government realized a need to ‘fast-track’ efforts to add supply to PLN’s power grid. It was supposed to provide an additional 10,000 megawatts of electricity by this year, but had only added 4,000 megawatts since 2007. Indonesia’s power plants collectively supply 31,000 megawatts to the entire country.
Two new coal-fired plants in Pemalang will represent the first stage of the new efforts, producing 800-1000 megawatts. PLN wants to add 4,500 megawatts by the end of this year and another 1,000 by 2013.
Four companies had qualified to bid for the project, including one other Japanese firm. The other three were Japanese trading company Marubeni Corp, China’s largest coal producer China Shenhua Energy Company, and a consortium between China National Technical Import Corp and Guangdong Yudean Group.
source & article: The Jakarta Globe
Officials from the Philippines have visited China to drum up investment and support for new infrastructure projects, which the new Aquino administration hopes will spur growth and enable the country to get back some of its mojo for economic development. Chinese state-owned enterprises and private firms have expressed interest in playing a part, with Philippines Finance Secretary Cesar Purisima reporting the Chinese consider his country ‘an important neighbor’. They also appeared willing to fund grants and interest-free loans in order to fund feasibility studies into priority projects.
Although the visit was a general mission to gauge interest in closer economic ties, officials will now return to China with a specific list of projects and priorities. Public-private partnerships are the main attractions the government has planned for companies investing in the Philippines, with a focus on infrastructure development.
According to the Philippine Daily Inquirer, potential partnerships include: the MRT/LRT expansion project, MRT Line 2 East extension, Panglao Airport, Laguindingan Airport operation and maintenance, Puerto Princesa Airport, Daraga International Airport, Kalibo Airport, Naia Terminal 3 upgrade and full operationalization, CALA Expressway (Manila side), Naia Expressway Phase II, Central Luzon Expressway Phase I, and supply of treated bulk water for Metro Manila.
Australia’s international trade development agency Austrade is encouraging local firms to get involved in a series of major transport proposals across Asia. The region’s emerging big hitters have realized the importance of solid infrastructure to support their booming economies and logistical needs, especially airport expansion and roadway construction.
Among the projects Austrade has flagged for attention are Indonesia’s US$255 million Ngurah Rai Denpasar Bali International Airport expansion and accompanying expressway, due to open before the 2013 APEC Summit, new expressway and metro line projects in Vietnam, and development of numerous transport plans and policies for the Philippines. There’s also the $2.3 billion Phase 2 of Thailand’s Suvarnabhumi Airport improvement involving a third runway and new passenger terminals. As well as the Southeast Asian projects, giants China and India are also active in the infrastructure boom, with Beijing planning a second airport and India investigating dedicated freight rail corridors (DFCs) and over 70,000km of proposed new roadways.
Austrade’s Senior Export Adviser Stan Roche said Australian companies could offer their expertise in several areas, not only in design and engineering but also in finance advisory and expertise in dealing with public-private partnerships (PPP). There were also other opportunities in related fields like security systems and technology.
Here’s an interesting fact: in 2010, Jakarta’s Soeharto-Hatta airport became the busiest in Southeast Asia with a whopping 43.7 million passengers received in 2010, up 17.7% on the previous year, according to eTurboNews.
This news might surprise anyone who assumed a higher profile hub like Singapore’s Changi or Bangkok’s Suvarnabhumi would take the crown. After all, both feature shiny, modern and award-winning terminals designed to handle larger numbers and both saw double-digit percentage passenger increases in 2010. Domestic passengers were by far the majority of Jakarta’s traffic, with internationals making up only 9 million (20-22%) of the total. Bangkok, on the other hand, received 33 million international passengers (77% of its total 42.78 million) and Singapore is the busiest international gateway with a total of 42.08 million passengers (as a city-state, all flights are international).
Indonesians’ increased purchasing power is the main reason for an increase in air travel, with 43.7 million domestic passengers country-wide in 2010, a 22% increase from 2009. Total international passenger numbers also grew 20% to 9.6 million in the same period. Both numbers are expected to continue increasing in 2011 and beyond.
The pressure is now on to upgrade Soeharto-Hatta’s facilities. Like other infrastructure in Indonesia it has struggled to keep up with economic growth, and could be a barrier to further growth without improvements. The airport’s official capacity of 22 million per year is only half the 2010 total, and there is still no rail link to the city center. The government has acknowledged the problem and the airport’s state-controlled operator, Angkasa Pura II, plans to expand the newer Terminal 3′s capacity from 4 to 20 million passengers by 2012/13, starting April this year. Work on a brand new Terminal 4 will also begin this year, intended to take the airport’s total capacity to 60 million per year by 2016, and rumors have begun to circulate that the rail link will finally be constructed. A recent agreement with Japan will bring in US$31 billion investment in Jakarta’s transport infrastructure.
source & article: eTurboNews
Our favorite stories from the mass transit sector in the past week: Malaysia Steel Works (KL) Bhd, or Masteel, and KUB Malaysia Bhd are coming together to build a new intercity transit system for Iskandar Malaysia in Johor, while a Chinese region is planning a rail link from Nanning to Singapore through Vietnam, at least part of which is high-speed.
Masteel expects its project will be completed by 2013. The RM1.23 billion (US$ 401million), 100km intercity system will be the first of its kind in Johor and run on existing rail. It will cover 25 regional centers and overseers hope to connect it eventually with the MRT line from Singapore. About 70% of the cost will come from the public-private partnership scheme and the companies are in negotiations with the Malaysian government’s Economic Planning Unit over a 25 year concession deal.
Meanwhile, China’s autonomous southern region of Guangxi Zhuang has plans to increase trade with ASEAN over the next five years with a high speed rail link between the cities of Nanning and Pinxiang near the Vietnamese border. Details are scant at the moment but it seems the $3.05 billion project would connect to a 5,000 rail link passing along the ‘Nanning-Singapore Economic Corridor’ through Vietnam (and presumably other countries along the way).